Thursday, November 15, 2012
Aldermen override mayor’s veto
By SUE WATSON
A growing riff between the mayor and board of aldermen, over whether to abide by guidelines at the Holly Springs Utility Department and those required by the Tennessee Valley Authority, may have come to a resolution during a November 7 board meeting.
The board voted 4-1 to sign an agreement with TVA dealing with rules for collections of electric bills. The motion to override the mayor’s veto and to sign a compliance agreement with TVA was made by alderman Russell Johnson and seconded by alderman Harvey Payne. When the roll was called, those two aldermen, plus aldermen Johnnie Ree Bagley-Johnson and Garrie Colhoun, voted for the override, with alderman Calvin James voting nay, thus siding with the mayor.
The mayor said he would not sign the compliance agreement.
In a lengthy written statement, read by Mayor Andre’ DeBerry before the board action, he cited his reasons for vetoing a motion in October to comply with the agreement. Three representatives with TVA were present at the meeting but did not enter the fray.
Many of the mayor’s comments were a repeat of those he made November 1 at a hastily arranged evening public meeting held at the Multi-Purpose Building.
He said he has tried to get agencies to help those with current and outstanding utility bills. He said TVA said two years ago the practice of extending time for those in arrears to pay their utility bills before services were shut off was unacceptable.
TVA alleged the utility was practicing a “de facto welfare plan,” the mayor said.
TVA is “changing its rates and asserting itself,” he said.
DeBerry said his “defiance and actions are well-intended,” while some have accused him of a political motive in defying TVA.
He said he has a problem with an outside agency (TVA) requiring a contract that allegedly supersedes the current contract with TVA and the city.
“Big and might don’t always make you right,” he said. “I have no reservations to make my statements because I speak to the customers, for the assertions we are running a de facto welfare system.”
The mayor called upon the board attorney to answer a question – “if you in fact sign a compliance agreement, does it not take precedence over the contract?”
“It would be in addition to (the contract),” said attorney Ki Jones.
“For one party to extract an agreement, I think it itself is a breach of contract,” DeBerry said. “A contract should be an agreement of both parties. What was the need to accept another agreement? You null and void the contract at this time. This board would not want its hands tied for 33 years.
“I do not think we have to sit here. I never said I would adhere to the contract. I am not in favor of signing an agreement on top of the contract. It seems to me the board feels it is compelled to do that. I have no problem with enforcing the policies of this board. I am bound by the policies set by this board. Nowhere it says I have to (sign the agreement). You undercut the authority (of the city) as a political subdivision of the state. TVA is also an extension of an arm of the federal government. They, themselves, say they have to meet standards. I could not see myself signing an agreement that is counterproductive to this city.”
Johnson said the board has to resolve the action it took in October when it approved the compliance agreement with TVA. He then motioned to override the mayor’s veto and Payne seconded.
The mayor called for discussion and some in the audience attempted to join the fray, but DeBerry told them the discussion was confined to the mayor and board. No alderman entered the discussion so the mayor added more of his own thoughts.
“Ki, should we be signing this compliance contract?” he asked the attorney.
“We asked TVA to modify this agreement,” Jones began. “I advised the board prior to the last vote. We said this was a beginning of a relationship to get in compliance with regulatory requirements. This (compliance agreement) does not add to the duties. We are saying by the agreement we will comply with the contract.”
Jones added he does not know how many of TVA’s customers (distributors like HSUD) are in non-compliance.
The mayor said the Mississippi Municipal League had weighed in on the issue, saying it would be setting a precedence to sign a compliance agreement.
“I have not been a party to those communications,” said Jones. “I cannot expound on that.”
With discussion closed, the board voted 4-1 to override the mayor’s veto.
“I am not going to sign,” said the mayor. “I don’t have to.”
“The vice-mayor can act in the mayor’s absence,” said Jones. “It would be in order and should reflect on the minutes.”
The board then motioned to allow the vice-mayor, Bagley-Johnson, to act in the absence of the mayor. The motion passed 4-1 with Alderman James voting nay.
With this business concluded, the three TVA representatives exited the room without comment.
Later in the meeting, after other business had been taken up, the board and mayor resumed discussion of comparative rates for electricity charged by various utilities served by TVA.
DeBerry said, of 28 distributors, 14 of which are co-ops, the rates paid by the Okolona electric department were reported to be on the same scale as the city. Tupelo charges the lowest rates, being a larger distribution system. The mayor said he expects Tupelo’s rates to rise once electronic meter reading is in place.
All distributors on the TVA system pay the same wholesale price for power with the fuel cost adjustment moving up or down.
Johnson asked what the margin of operation is at HSUD and if it could be reduced to lower rates.
HSUD general manager Don Hollingsworth said there are four things that affect rates adversely -- power loss over the lines, power losses at transformers that are not hooked to a customer's meter, right-of-way losses, and the tax equivalency.
“We pay the same wholesale price (to TVA) and our rates are higher,” said Johnson. “There must be something we could to do to lower our costs. We need in-house reduction (in costs).”
Hollingsworth said HSUD’s profit margin should be higher because it serves widespread rural areas in five counties.
“What can we do to reduce our overhead to take our rates down?” asked Johnson, adding that perhaps employees should not be going to and from the job to home in company trucks.
Hollingsworth said certain employees are always on call in case there are emergencies and response time is shortened if employees have their work trucks parked at home at night. He said if employees do not park their work trucks at home, the quality of service could be hurt while saving HSUD very little in costs to operate.
DeBerry said looking at pricing, he found 22 counties with lower rates than Holly Springs, two with similar rates, and three with higher rates.
“You look at Tupelo, but we pay $20 more a month in utilities,” he said. “Northcentral is $10 a month cheaper. If we all are charged the same wholesale cost, all is not coming from vehicles (work vehicles domiciled at the houses of employees).”
Hollingsworth then referred to a handout, saying the first sheet shows the tax equivalency over a period of time, a rate that is charged that, in a large way, supports the city’s budget. He said it had greatly increased over the years “percent-wise.”
The general city budget contains about $1.7 million in tax equivalency revenues that are derived from electricity rates.
He said there is a great disparity in the municipal rates of distributors served by TVA.
Hollingsworth said the large service region of HSUD through rural areas also accounts for land line loss of about $1.2 million a year. He said HSUD is trimming rights-of-way of tree limbs and vegetation that would carry away power from lines and taking off old transformers still connected to the lines but not serving a customer (old abandoned structures).
He then addressed the tax equivalency, saying, “Let’s be real. This tax equivalency is TVA’s payment to the city in lieu of taxes. It’s TVA’s payment to the city, not a cost of the utility department (expenditures for operation).”
The tax equivalency is money the city charged to the customer in lieu of (ad valorem) taxes, Hollingsworth said.
“Don’t confuse what we do in taxes as a cost that affects the rate,” he said. “They allow you to collect that, but it is built into your rate (rates customers are charged).”
DeBerry stated the rates should be based on the wholesale cost for power from TVA, plus what it costs to operate the electric side of the utility department.
Confused over the meaning, Johnson asked where the tax equivalency comes from.
“When you pay your bill,” said Hollingsworth.
“A portion of my bill pays part of the tax equivalency?” Johnson asked.
“TVA is causing its rate payers to pay its taxes,” DeBerry asserted.
“No, no, no, no,” said Hollingsworth. “The tax equivalency is for HSUD’s system – the city of Holly Springs is allowed to collect that in lieu of taxes.”
DeBerry then said there is no relationship between the rates and the tax equivalency. Johnson then said that the tax equivalency is money the city uses to operate off of, in addition to charging ad valorem property taxes.
“Am I being kicked twice?” he asked, rhetorically.
He said 37 percent ($1.7 million a year of the $2.68 million in this year’s city budget) in tax equivalency in the city budget comes from customers’ payments in electricity bills.
Hollingsworth asked for a planning meeting so the board can explain the utility costs to their constituents.
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